<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-87139
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY CHANGE.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE NOT AN OFFER TO
SELL THESE SECURITIES AND ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 13, 1999
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 24, 1999)
5,000,000 SHARES
FLEXTRONICS LOGO
ORDINARY SHARES
-------------------------
Flextronics International Ltd. is offering 5,000,000 ordinary shares in a
firm commitment underwriting. On October 12, 1999, the last reported sale price
of the ordinary shares on the Nasdaq National Market was $65.25 per share.
-------------------------
The ordinary shares are listed on the Nasdaq National Market under the
symbol "FLEX."
-------------------------
INVESTING IN THE ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE S-4 OF THIS PROSPECTUS SUPPLEMENT.
-------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
---------- ----------
<S> <C> <C>
Offering Price.............................................. $ $
Discounts and Commissions to Underwriters...................
Offering Proceeds to Flextronics............................
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
We have granted the underwriters the right to purchase up to an additional
750,000 ordinary shares to cover any over-allotments. The underwriters can
exercise this right at any time within 30 days after the offering. Banc of
America Securities LLC expects to deliver the ordinary shares to investors on or
about , 1999.
BANC OF AMERICA SECURITIES LLC MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
SG COWEN
THOMAS WEISEL PARTNERS LLC
-------------------------
October , 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement
Forward-Looking Statements.................................. S-1
Prospectus Supplement Summary............................... S-2
Risk Factors................................................ S-4
Dividends................................................... S-11
Use of Proceeds............................................. S-11
Price Range of Ordinary Shares.............................. S-12
Capitalization.............................................. S-13
Consolidated Selected Financial Data........................ S-14
Business.................................................... S-15
Underwriters................................................ S-21
Legal Matters............................................... S-23
Prospectus
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Forward-Looking Statements.................................. 3
The Company................................................. 4
Enforcement of Civil Liabilities............................ 4
Risk Factors................................................ 4
Use of Proceeds............................................. 4
Description of Capital Shares............................... 5
Taxation.................................................... 7
Plan of Distribution........................................ 9
Legal Matters............................................... 10
Experts..................................................... 10
</TABLE>
The number of shares to be outstanding after the offering is based on the
number of ordinary shares actually outstanding as of September 24, 1999. This
number excludes a total of 9,583,782 ordinary shares subject to outstanding
options or reserved for issuance under our 1993 Share Option Plan, 1997 Interim
Option Plan, 1998 Interim Option Plan, 1999 Interim Option Plan and 1997
Employee Share Purchase Plan.
The information in this prospectus supplement assumes that the
underwriters' over-allotment option will not be exercised. In addition, the
financial information in this prospectus supplement includes the results of
operations and balance sheet of Kyrel EMS Oyj, which we acquired in July 1999 in
a transaction accounted for as a pooling of interests. In this prospectus
supplement and in the accompanying prospectus, references to "U.S. dollars" and
"$" are to United States currency and references to "Singapore dollars" and "S$"
are to Singapore currency.
<PAGE> 3
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus (including the
documents incorporated by reference in the prospectus) contain forward-looking
statements regarding our plans, expectations, estimates and beliefs. Our actual
results could differ materially from those discussed in, or implied by, these
forward-looking statements. Forward-looking statements are identified by words
such as "believes," "anticipates," "expects," "intends," "plans," "will," "may"
and other similar expressions. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. Forward-looking statements in
these documents include, but are not necessarily limited to, those relating to:
- our ability to carry out our strategies;
- our expected growth in sales;
- the planned expansion of our facilities;
- potential acquisitions;
- adoption of outsourcing by OEMs;
- our ability to become an integral part of our customers' operations;
- our ability to win new customer contracts;
- our ability to implement our new management information system;
- our ability to achieve Year 2000 compliance;
- tax matters;
- currency fluctuations; and
- our planned opening of an industrial park in Brazil.
Factors that could cause actual results or conditions to differ from those
anticipated by these and other forward-looking statements include those more
fully described in "Risk Factors."
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with different information. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this prospectus supplement is
accurate as of the date on the front cover of this prospectus supplement only.
Our business, financial condition, results of operations and prospects may have
changed since that date.
S-1
<PAGE> 4
PROSPECTUS SUPPLEMENT SUMMARY
You should read the following summary together with the more detailed
information appearing elsewhere in this prospectus supplement and in the
accompanying prospectus (including the documents incorporated by reference in
the prospectus).
THE COMPANY
Flextronics is a leading provider of advanced electronics manufacturing
services to original equipment manufacturers, or OEMs, primarily in the
telecommunications and networking, consumer electronics and computer industries.
We provide a wide range of integrated services, from initial product design to
volume production and fulfillment. Our manufacturing services range from printed
circuit board fabrication and assembly to complete product assembly and test. We
believe that we have developed particular strengths in advanced interconnect,
miniaturization and packaging technologies, and in the engineering and
manufacturing of wireless communications products employing radio frequency
technology. In addition, we provide advanced engineering services, including
product design, PCB layout, quick-turn prototyping and test development.
Throughout the production process, we offer logistics services, such as
materials procurement, inventory management, packaging and distribution.
Through a combination of internal growth and acquisitions, we have become
the fourth largest provider of electronics manufacturing services, with revenues
of $2.0 billion in fiscal 1999 and $1.5 billion for the six months ended
September 24, 1999. We believe that our size, global presence and expertise
enable us to win large outsourced manufacturing programs from leading
multinational OEMs. We offer a complete and flexible manufacturing solution that
provides accelerated time-to-market and time-to-volume production, as well as
reduced production costs. By working closely with customers throughout the
design, manufacturing and distribution process, and by offering highly
responsive services, we believe that we can become an integral part of our
customers' operations.
Our customers include industry leaders such as Cisco, Compaq, Ericsson,
Hewlett-Packard, Lucent, Microsoft, Motorola, Nokia, Nortel Networks, Philips,
Qualcomm and 3Com. Due to our focus on high growth technology sectors, our
prospects are influenced by certain major trends, such as the buildout of the
communications and Internet infrastructure, the proliferation of wireless
devices and other trends in electronics technologies. In addition, our growth is
driven by the accelerating pace at which leading OEMs are adopting outsourcing
as a core business strategy.
We have established an extensive network of manufacturing facilities in the
world's major electronics markets -- Asia, the Americas and Europe -- to serve
the increased outsourcing needs of both multinational and regional OEMs. We
strategically locate manufacturing facilities near our customers and their end
markets. We have also established in low cost regions fully integrated, high
volume industrial parks that provide a total manufacturing and fulfillment
solution by locating manufacturing and distribution operations and suppliers at
a single site. Our industrial parks are located in China, Hungary and Mexico,
and we are developing an additional industrial park in Brazil. This integrated
approach to production and distribution benefits our customers by reducing
logistical barriers and costs, improving supply-chain management, increasing
flexibility, lowering transportation costs and reducing turnaround times.
Since the beginning of fiscal 1998, we have increased overall capacity by
approximately 3.2 million square feet through internal growth and acquisitions.
As a result, we have grown to approximately 4.7 million square feet of capacity
on four continents.
S-2
<PAGE> 5
THE OFFERING
Ordinary shares ............. 5,000,000 shares
Ordinary shares to be
outstanding after the
offering................... 55,302,008 shares
Use of proceeds.............. The net proceeds will be used to fund the
further expansion of our business, including
additional working capital and capital
expenditures and general corporate purposes. We
may use a portion of the net proceeds for
strategic acquisitions or investments.
Nasdaq National Market
symbol..................... FLEX
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following unaudited summary consolidated financial information includes
for all periods presented the results of operations and balance sheet of Kyrel
EMS Oyj, which we acquired in July 1999 in a transaction accounted for as a
pooling of interests. The following unaudited summary consolidated balance sheet
data is presented on an actual basis and as adjusted to give effect to the sale
of the 5,000,000 ordinary shares offered hereby at the assumed public offering
price of $65.25 per share and after deducting the estimated underwriting
discounts and commissions, the estimated offering expenses payable by us and the
application of the estimated net proceeds.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, ----------------------------
-------------------------------------------------------------- SEPTEMBER 25, SEPTEMBER 24,
1995 1996 1997 1998 1999 1998 1999
---------- ---------- ---------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............ $ 447,954 $ 834,064 $ 820,742 $1,191,194 $2,043,374 $868,163 $1,482,090
Income from
operations......... 19,066 10,857 25,021 40,259 80,880 38,242 57,371
Net income (loss).... 13,829 (2,716) 14,198 18,251 52,416 24,778 38,217
Diluted net income
(loss) per share... $ 0.44 $ (0.08) $ 0.39 $ 0.46 $ 1.09 $0.55 $0.70
Weighted average
ordinary shares and
equivalents
outstanding -- diluted.. 31,586 32,694 36,478 40,016 47,985 45,160 54,353
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 24, 1999
----------------------------
ACTUAL AS ADJUSTED
------------- -------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................................... $ 203,099 $ 515,999
Total assets.............................................. 1,596,730 1,909,630
Long-term debt and capital lease obligations, excluding
current portion......................................... 230,570 230,570
Shareholders' equity...................................... 534,361 847,261
</TABLE>
S-3
<PAGE> 6
RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information in this prospectus
supplement and the accompanying prospectus (including the information
incorporated by reference in the accompanying prospectus) before deciding to
invest in our ordinary shares. If any of the risks described below materializes,
our operating results and financial condition could be adversely affected, and
the trading price of our ordinary shares could decline.
IF WE DO NOT MANAGE EFFECTIVELY THE EXPANSION OF OUR OPERATIONS, OUR BUSINESS
MAY BE HARMED.
We have grown rapidly in recent periods, and this growth may not continue.
Internal growth will require us to develop new customer relationships and expand
existing ones, improve our operational and information systems and further
expand our manufacturing capacity.
We plan to increase our manufacturing capacity by expanding our facilities
and by adding new equipment. This expansion involves significant risks. For
example:
- we may not be able to attract and retain the management personnel and
skilled employees necessary to support expanded operations;
- we may not efficiently and effectively integrate new operations, expand
existing ones and manage geographically dispersed operations;
- we may incur cost overruns;
- we may encounter construction delays, equipment delays or shortages,
labor shortages and disputes and production start-up problems that could
adversely affect our growth and our ability to meet customers' delivery
schedules; and
- we may not be able to obtain funds for this expansion, and we may not be
able to obtain loans or operating leases with attractive terms.
In addition, we expect to incur new fixed operating expenses associated
with our expansion efforts, including substantial increases in depreciation
expense and rental expense, that will increase our cost of sales. If our
revenues do not increase sufficiently to offset these expenses, our operating
results would be adversely affected. Our expansion, both through acquisitions
and internal growth, has contributed to our incurring significant accounting
charges and experiencing volatility in our operating results and may continue to
do so in the future.
WE MAY ENCOUNTER DIFFICULTIES WITH ACQUISITIONS, WHICH COULD HARM OUR BUSINESS.
We have completed a number of acquisitions of businesses and facilities and
expect to continue to pursue growth through acquisitions in the future.
Acquisitions involve a number of risks and challenges, including:
- diversion of management's attention;
- the need to integrate acquired operations;
- potential loss of key employees and customers of the acquired companies;
- lack of experience operating in the geographic market of the acquired
business; and
- an increase in our expenses and working capital requirements.
S-4
<PAGE> 7
To integrate acquired operations, we must implement our management
information systems and operating systems and assimilate and manage the
personnel of the acquired operations. The difficulties of this integration may
be further complicated by geographic distances. The integration of acquired
businesses may not be successful and could result in disruption to other parts
of our business.
Any of these and other factors could adversely affect our ability to
achieve anticipated levels of profitability at acquired operations or realize
other anticipated benefits of an acquisition. Furthermore, any future
acquisitions may require additional debt or equity financing, which could
increase our leverage or be dilutive to our existing shareholders. No assurance
can be given that we will consummate any acquisitions in the future.
WE HAVE NEW CUSTOMER RELATIONSHIPS FROM WHICH WE ARE NOT YET RECEIVING
SIGNIFICANT REVENUES, AND ORDERS FROM THESE CUSTOMERS MAY NOT REACH ANTICIPATED
LEVELS.
We have recently announced major new customer relationships from which we
anticipate significant future sales. However, similar to our other customer
relationships, there are no volume purchase commitments under these new
programs, and the revenues we actually achieve may not meet our expectations. In
anticipation of future activities under these programs, we are incurring
substantial expenses as we add personnel and manufacturing capacity and procure
materials. Our operating results will be adversely affected if sales do not
develop to the extent and within the time frame that we anticipate.
OUR CUSTOMER REQUIREMENTS AND OPERATING RESULTS VARY SIGNIFICANTLY.
Electronics manufacturing service providers must provide increasingly rapid
product turnaround for their customers. We generally do not obtain firm,
long-term purchase commitments from our customers, and we continue to experience
reduced lead times in customer orders. Customers may cancel their orders, change
production quantities or delay production for a number of reasons.
Cancellations, reductions or delays by a significant customer or by a group of
customers would adversely affect our results of operations.
In addition to the variable nature of our operating results due to the
short-term nature of our customers' commitments, other factors may contribute to
significant fluctuations in our results of operations. These factors include:
- the timing of customer orders;
- the volume of these orders relative to our capacity;
- market acceptance of customers' new products;
- changes in demand for customers' products and product obsolescence;
- the timing of our expenditures in anticipation of future orders;
- our effectiveness in managing manufacturing processes;
- changes in the cost and availability of labor and components;
- changes in our product mix;
- changes in economic conditions;
- local factors and events that may affect our production volume, such as
local holidays; and
- seasonality in customers' product requirements.
S-5
<PAGE> 8
One of our significant end-markets is the consumer electronics market. This
market exhibits particular strength towards the end of the year in connection
with the holiday season. As a result, we have experienced relative strength in
revenues in our third fiscal quarter.
We make significant decisions, including the levels of business that we
will seek and accept, production schedules, component procurement commitments,
personnel needs and other resource requirements, based on our estimates of
customer requirements. The short-term nature of our customers' commitments and
the possibility of rapid changes in demand for their products reduces our
ability to estimate accurately future customer requirements. On occasion,
customers may require rapid increases in production, which can stress our
resources and reduce margins. Although we have increased our manufacturing
capacity and plan further increases, we may not have sufficient capacity at any
given time to meet our customers' demands. In addition, because many of our
costs and operating expenses are relatively fixed, a reduction in customer
demand can adversely affect our gross margins and operating income.
A MAJORITY OF OUR SALES COMES FROM A SMALL NUMBER OF CUSTOMERS; IF WE LOSE ANY
OF THESE CUSTOMERS, OUR SALES COULD DECLINE SIGNIFICANTLY.
Sales to our five largest customers have represented a majority of our net
sales in recent periods. Our five largest customers accounted for approximately
54% of consolidated net sales in the six months ended September 24, 1999, and
59% in fiscal 1999. Our largest customers during fiscal 1999 were Philips,
Ericsson and Cisco, accounting for approximately 16%, 15% and 11% of
consolidated net sales, respectively. The identity of our principal customers
has varied from year to year, and our principal customers may not continue to
purchase services from us at current levels, if at all. Significant reductions
in sales to any of these customers, or the loss of major customers, would have a
material and adverse effect on us. We may not be able to replace expired,
canceled, or reduced contracts with new business in a timely manner. See "-- Our
customer requirements and operating results vary significantly."
WE ARE DEPENDENT UPON THE ELECTRONICS INDUSTRY WHICH CONTINUALLY PRODUCES
TECHNOLOGICALLY ADVANCED PRODUCTS WITH SHORT LIFE CYCLES; OUR INABILITY TO
CONTINUALLY MANUFACTURE SUCH PRODUCTS ON A COST-EFFECTIVE BASIS WOULD HARM OUR
BUSINESS.
Factors affecting the electronics industry in general could have a material
adverse effect on our customers and, as a result, on us. These factors include:
- the inability of our customers to adapt to rapidly changing technology
and evolving industry standards, which results in short product life
cycles;
- the inability of our customers to develop and market their products, some
of which are new and untested. If customers' products become obsolete or
fail to gain widespread commercial acceptance, our business may be
materially and adversely affected; and
- recessionary periods in our customers' markets.
S-6
<PAGE> 9
THERE MAY BE SHORTAGES OF REQUIRED ELECTRONIC COMPONENTS.
A substantial majority of our net sales are derived from turnkey
manufacturing in which we are responsible for procuring materials, which
typically results in our bearing the risk of component price changes.
Accordingly, certain component price changes could adversely affect our
operating results. At various times, there have been shortages of some of the
electronic components that we use, and suppliers of some components have lacked
sufficient capacity to meet the demand for such components. In recent months,
component shortages have become more prevalent in our industry. In some cases,
supply shortages could curtail production of products using a particular
component and could result in manufacturing and shipping delays.
OUR INDUSTRY IS EXTREMELY COMPETITIVE.
The electronics manufacturing services industry is extremely competitive
and includes hundreds of companies, several of which have achieved substantial
market share. Current and prospective customers also evaluate our capabilities
against the merits of internal production. Some of our competitors, including
Solectron and SCI Systems, have substantially greater market shares than us, and
substantially greater manufacturing, financial, research and development and
marketing resources. In recent years, many participants in the industry,
including us, have substantially expanded their manufacturing capacity. If
overall demand for electronics manufacturing services should decrease, this
increased capacity could result in substantial pricing pressures, which could
adversely affect our operating results.
WE ARE SUBJECT TO THE RISK OF INCREASED TAXES.
We have structured our operations in a manner designed to maximize income
in countries where tax incentives have been extended to encourage foreign
investment or where income tax rates are low. Our taxes could increase if these
tax incentives are not renewed upon expiration or tax rates applicable to us are
increased. Substantially all of the products manufactured by our Asian
subsidiaries are sold to customers based in North America and Europe. We believe
that profits from our Asian operations are not sufficiently connected to
jurisdictions in North America or Europe to give rise to income taxation there.
However, tax authorities in jurisdictions in North America and Europe could
challenge the manner in which profits are allocated among our subsidiaries, and
we may not prevail in any such challenge. If the profits recognized by our
subsidiaries in jurisdictions where taxes are lower became subject to income
taxes in other jurisdictions, our worldwide effective tax rate could increase.
WE CONDUCT OPERATIONS IN A NUMBER OF COUNTRIES AND ARE SUBJECT TO RISKS OF
INTERNATIONAL OPERATIONS.
The geographical distances between Asia, the Americas and Europe create a
number of logistical and communications challenges. Our manufacturing operations
are located in a number of countries, including Austria, Brazil, China, Finland,
France, Hungary, Italy, Malaysia, Mexico, Sweden, the United Kingdom and the
United States. As a result, we are affected by economic and political conditions
in those countries, including:
- fluctuations in the value of currencies;
- changes in labor conditions;
S-7
<PAGE> 10
- longer payment cycles;
- greater difficulty in collecting accounts receivable;
- burdens and costs of compliance with a variety of foreign laws;
- political and economic instability;
- increases in duties and taxation;
- imposition of restrictions on currency conversion or the transfer of
funds;
- limitations on imports or exports;
- expropriation of private enterprises; and
- reversal of the current policies, including favorable tax and lending
policies, encouraging foreign investment or foreign trade by our host
countries.
The attractiveness of our services to our U.S. customers can be affected by
changes in U.S. trade policies, such as "most favored nation" status and trade
preferences for certain Asian nations. In addition, some countries in which we
operate, such as Brazil, Mexico and Malaysia, have experienced periods of slow
or negative growth, high inflation, significant currency devaluations and
limited availability of foreign exchange. Furthermore, in countries such as
Mexico and China, governmental authorities exercise significant influence over
many aspects of the economy, and their actions could have a significant effect
on us. Finally, we could be adversely affected by inadequate infrastructure,
including lack of adequate power and water supplies, transportation, raw
materials and parts in countries in which we operate.
Risks Relating to China. Under its current leadership, the Chinese
government has been pursuing economic reform policies. However, the Chinese
government may not continue to pursue these policies, and these policies may not
be successful even if pursued. In addition, China does not have a comprehensive
and highly developed system of laws, and enforcement of laws and contracts is
uncertain. The United States annually reconsiders the renewal of most favored
nation trading status of China. China's loss of most favored nation status could
adversely affect us by increasing the cost to U.S. customers of products
manufactured by us in China.
Risks Relating to Mexico. The Mexican government exercises significant
influence over many aspects of the Mexican economy and its action could have a
significant effect on private sector entities in general and us in particular.
Risks Relating to Hungary. Hungary has undergone significant political and
economic change in recent years. Political, economic, social and other
developments, and changes in laws could have a material and adverse effect on
our business. Annual inflation and interest rates in Hungary have historically
been much higher than those in Western Europe. Exchange rate policies have not
always allowed for the free conversion of currencies at the market rate. Laws
and regulations in Hungary have been, and continue to be, substantially revised
during its transition to a market economy. As a result, laws and regulations may
be applied inconsistently. Also in some circumstances, it may not be possible to
obtain the legal remedies provided for under those laws and regulations in a
reasonably timely manner, if at all.
Risks Relating to Brazil. During the past several years, the Brazilian
economy has been affected by significant intervention by the Brazilian
government. The Brazilian government has changed monetary, credit, tariff and
other policies to influence the course of Brazil's economy. The Brazilian
government's actions to control inflation and effect
S-8
<PAGE> 11
other policies have often involved wage, price and exchange controls as well as
other measures such as freezing bank accounts and imposing capital controls.
WE ARE SUBJECT TO RISKS OF CURRENCY FLUCTUATIONS.
A significant portion of our business is conducted in the Swedish kronor,
European euro and Brazilian real. In addition, some of our costs, such as
payroll and rent, are denominated in currencies such as the Singapore dollar,
the Hong Kong dollar, the Malaysian ringgit, the Hungarian forint, the Mexican
peso and the British pound, as well as the kronor, the euro and the real. In
recent years, the Hungarian forint, Brazilian real and Mexican peso have
experienced significant devaluations, and in January 1999 the Brazilian real
experienced further significant devaluations. Changes in exchange rates between
these and other currencies and the U.S. dollar will affect our cost of sales and
operating margins. We cannot predict the impact of future exchange rate
fluctuations. We use financial instruments, primarily forward purchase
contracts, to hedge Japanese yen, European euro, U.S. dollar and other foreign
currency commitments arising from trade accounts payable and fixed purchase
obligations. Because we hedge only fixed obligations, we do not expect that
these hedging activities will have a material effect on our results of
operations or cash flows. However, our hedging activities may be unsuccessful,
and we may change or reduce our hedging activities in the future.
WE DEPEND ON OUR KEY PERSONNEL.
Our success depends to a large extent upon the continued services of our
key executives and skilled personnel. Generally our employees are not bound by
employment or non-competition agreements, and there can be no assurance that we
will retain our officers and key employees. We could be materially and adversely
affected by the loss of key personnel.
WE ARE SUBJECT TO RISKS FROM THE YEAR 2000 ISSUE.
The Year 2000 computer issue refers to a condition in computer software
where a two digit field rather than a four digit field is used to distinguish a
calendar year. Unless corrected, some computer programs could be unable to
function on January 1, 2000, and thereafter until corrected, as they will be
unable to distinguish the correct date. Such an uncorrected condition could
significantly interfere with the conduct of our business, could result in
disruption of our operations, and could subject it to potentially significant
legal liabilities.
We are primarily addressing the Year 2000 issue concerning enterprise wide
applications by replacing our management information system with a new
enterprise management information system that is designed to provide enhanced
functionality. We have been advised that our new enterprise management
information system is Year 2000 compliant. However, we cannot provide assurances
that the new system will be Year 2000 compliant. We currently have implemented
this new information system in a majority of our facilities in Asia, Central
Europe, Western Europe and the Americas. We are currently evaluating the
implementation of this new management information system at the facilities that
we have recently acquired in Finland, France and Sweden. The new system will
significantly affect many aspects of our business, including our manufacturing,
sales and marketing and accounting functions. The successful implementation of
this system is important to our future growth.
S-9
<PAGE> 12
Our business operations utilize electronic commerce systems and electronic
data interchanges with suppliers and customers to implement a variety of supply
chain management programs. While we are actively seeking assurances of Year 2000
compliance from our suppliers and customers, the failure by any one of these
third parties to address Year 2000 issues could result in our temporary
inability to process these supply chain management programs with such third
parties, and this inability could have a material and adverse impact on our
business and results of operations. In addition, we would be harmed if Year 2000
compliance issues resulted in serious disruptions in the operations of our
customers and suppliers.
We have facilities located in numerous countries throughout the world, and
these facilities depend on the local infrastructure for power,
telecommunications, transportation and other services. If Year 2000 issues cause
disruptions in these fundamental services, our ability to conduct our operations
could be seriously impaired. The Year 2000 issue also could affect our
infrastructure and production lines.
WE ARE SUBJECT TO ENVIRONMENTAL COMPLIANCE RISKS.
We are subject to a variety of environmental regulations relating to the
use, storage, discharge and disposal of hazardous chemicals. Although we believe
that our facilities are currently in material compliance with applicable
environmental laws, violations could occur. The costs and penalties that could
result from a violation of environmental laws could materially and adversely
affect us.
THE MARKET PRICE OF THE ORDINARY SHARES IS VOLATILE.
The stock market in recent years has experienced significant price and
volume fluctuations that have affected the market prices of technology
companies. These fluctuations have often been unrelated to or disproportionately
impacted by the operating performance of these companies. The market for our
ordinary shares may be subject to similar fluctuations. Factors such as
fluctuations in our operating results, announcements of technological
innovations or events affecting other companies in the electronics industry,
currency fluctuations and general market conditions may have a significant
effect on the market price of our ordinary shares.
S-10
<PAGE> 13
DIVIDENDS
Since inception, we have not declared or paid any cash dividends on our
ordinary shares, and our credit facility prohibits the payment of cash dividends
without the lenders' prior consent. The terms of our senior subordinated notes
also restrict our ability to pay cash dividends. We anticipate that all earnings
in the foreseeable future will be retained to finance the continuing development
of our business.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 5,000,000 ordinary
shares offered by this prospectus supplement and the accompanying prospectus
will be approximately $312.9 million, at an assumed public offering price of
$65.25 per share and after deducting the estimated underwriting discounts and
commissions. If the underwriters' over-allotment option is exercised in full, we
estimate that the net proceeds will be approximately $359.8 million. The net
proceeds will be used to fund the further expansion of our business, including
additional working capital and capital expenditures, and for general corporate
purposes. We may use a portion of the net proceeds for strategic acquisitions or
investments. However, we currently do not have any agreements or commitments to
make any such acquisitions or investments. Until the net proceeds have been
used, they will be invested in short-term marketable securities.
S-11
<PAGE> 14
PRICE RANGE OF ORDINARY SHARES
The ordinary shares are traded on the Nasdaq National Market under the
symbol "FLEX." The following table shows the high and low closing sale prices of
our ordinary shares since the beginning of our 1998 fiscal year.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Fiscal year ended March 31, 1998
First Quarter............................................ $13.50 $ 8.75
Second Quarter........................................... 23.81 13.19
Third Quarter............................................ 24.06 16.25
Fourth Quarter........................................... 23.94 14.88
Fiscal year ended March 31, 1999
First Quarter............................................ $25.56 $18.19
Second Quarter........................................... 23.50 11.31
Third Quarter............................................ 42.81 14.56
Fourth Quarter........................................... 51.00 33.13
Fiscal year ending March 31, 2000
First Quarter............................................ $58.25 $42.25
Second Quarter........................................... 67.63 44.13
Third Quarter (through October 12, 1999)................. 65.38 58.00
</TABLE>
On October 12, 1999, the closing sale price of the ordinary shares was
$65.25 per share.
S-12
<PAGE> 15
CAPITALIZATION
The following table sets forth the unaudited capitalization of Flextronics
as of September 24, 1999 on an actual basis and as adjusted to give effect to
the sale of the 5,000,000 ordinary shares offered hereby at an assumed public
offering price of $65.25 per share and after deducting the estimated
underwriting discounts and commissions, the estimated offering expenses payable
by us and the application of the estimated net proceeds.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 24, 1999
-------------------------
ACTUAL AS ADJUSTED
--------- ------------
(IN THOUSANDS)
<S> <C> <C>
Bank borrowings and current portion of long-term debt
and capital lease obligations......................... $183,205 $ 183,205
Long-term debt and capital lease obligations, excluding
current portion....................................... 230,570 230,570
Shareholders' equity:
Ordinary shares, S$0.01 par value;
250,000,000 shares authorized, 50,302,008 shares
issued and outstanding, 55,302,008 shares issued
and outstanding as adjusted(1)..................... 312 342
Additional paid-in capital............................ 432,491 745,361
Retained earnings..................................... 119,643 119,643
Accumulated other comprehensive loss.................. (18,085) (18,085)
-------- ----------
Total shareholders' equity......................... 534,361 847,261
-------- ----------
Total capitalization............................... 764,931 1,077,831
======== ==========
</TABLE>
- -------------------------
(1) Based on the number of ordinary shares actually outstanding as of September
24, 1999. Excludes a total of 9,583,782 ordinary shares subject to
outstanding options or reserved for issuance under our share option plans
and share purchase plan.
S-13
<PAGE> 16
CONSOLIDATED SELECTED FINANCIAL DATA
The following unaudited selected consolidated financial data reflects our
historical results of operations and balance sheet data, including the results
of operations and balance sheet data of Kyrel EMS Oyj, which we acquired in July
1999 in a transaction accounted for as a pooling of interests. The consolidated
selected financial data for the six months ended September 25, 1998 and
September 24, 1999 are derived from unaudited financial data and, in the opinion
of management, include all adjustments, consisting of only normal recurring
adjustments, considered necessary for a fair presentation. These historical
results are not necessarily indicative of the results to be expected in the
future.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, -----------------------------
-------------------------------------------------------------- SEPTEMBER 25, SEPTEMBER 24,
1995 1996 1997 1998 1999 1998 1999
---------- ---------- ---------- ---------- ---------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................ $ 447,954 $ 834,064 $ 820,742 $1,191,194 $2,043,374 $ 868,163 $1,482,090
Cost of sales.................... 406,076 754,546 747,491 1,081,189 1,878,360 795,188 1,370,892
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit..................... 41,878 79,518 73,251 110,005 165,014 72,975 111,198
Selling, general and
administrative expenses........ 21,959 37,111 39,711 57,214 75,109 32,959 50,953
Goodwill and intangibles
amortization................... 762 1,296 2,651 3,663 3,664 1,774 2,874
Provision for excess
facilities..................... -- 1,254 5,868 8,869 3,361 -- --
Acquired in-process research and
development.................... 91 29,000 -- -- 2,004 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from operations........... 19,066 10,857 25,021 40,259 80,880 38,242 57,371
Merger-related expenses and one
time charges................... (816) -- -- (7,415) -- -- (3,459)
Other expense, net............... (1,790) (4,879) (7,648) (12,275) (20,832) (10,162) (9,902)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes....... 16,461 5,977 17,374 20,569 60,048 28,080 44,010
Provision for income taxes....... 2,631 8,693 3,175 2,318 7,632 3,302 5,793
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)................ $ 13,829 $ (2,716) $ 14,198 $ 18,251 $ 52,416 $ 24,778 $ 38,217
========== ========== ========== ========== ========== ========== ==========
Diluted net income (loss) per
share.......................... $ 0.44 $ (0.08) $ 0.39 $ 0.46 $ 1.09 $ 0.55 $ 0.70
========== ========== ========== ========== ========== ========== ==========
Weighted average ordinary shares
used in computing per share
amounts........................ 31,586 32,694 36,478 40,016 47,985 45,160 54,353
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, AS OF
-------------------------------------------------------------- SEPTEMBER 24,
1995 1996 1997 1998 1999 1999
---------- ---------- ---------- ---------- ---------- -------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit)........ $ 52,205 $ 42,203 $ (16,314) $ 132,580 $ 251,598 $ 203,099
Total assets..................... 285,407 392,639 497,830 780,844 1,217,869 1,596,730
Long-term debt and capital lease
obligations, excluding current
portion........................ 32,371 37,479 32,623 192,418 219,995 230,570
Shareholders' equity............. 81,207 103,717 125,075 233,195 484,938 534,361
</TABLE>
S-14
<PAGE> 17
BUSINESS
Flextronics is a leading provider of advanced electronics manufacturing
services to OEMs primarily in the telecommunications and networking, consumer
electronics and computer industries. We provide a wide range of integrated
services, from initial product design to volume production and fulfillment.
These services provide our customers with accelerated time-to-market and
time-to-volume production, as well as reduced production costs. By working
closely with customers, and by offering flexible, highly responsive services, we
believe that we can become an integral part of their operations.
Through a combination of internal growth and acquisitions, we have become
the fourth largest provider of electronics manufacturing services with revenues
of $2.0 billion in fiscal 1999 and $1.5 billion for the six months ended
September 24, 1999. We believe that our size, global presence and expertise
enable us to win large outsourced manufacturing programs from leading
multinational OEMs. Our customers include industry leaders such as Cisco,
Ericsson, Hewlett-Packard, Lucent, Microsoft, Motorola, Nokia, Nortel Networks,
Philips, Qualcomm and 3Com. In addition, we recently significantly expanded the
scope of our relationships with a number of our existing customers, including
Compaq, Ericsson and Motorola, and have entered into relationships with a number
of new customers, including ABB Automation Products and General Instruments.
INDUSTRY OVERVIEW
Many OEMs in the electronics industry are increasingly utilizing
electronics manufacturing service providers in their business and manufacturing
strategies, and are seeking to outsource a broad range of manufacturing and
related engineering services. Outsourcing allows OEMs to take advantage of the
manufacturing expertise and capital investments of electronics manufacturing
service providers, thereby enabling OEMs to concentrate on their core
competencies, such as product development, marketing and sales. OEMs utilize
electronics manufacturing service providers to enhance their competitive
position by:
- reducing production costs;
- accelerating time-to-market and time-to-volume production;
- accessing advanced manufacturing and design capabilities;
- reducing capital investment requirements and fixed overhead costs;
- improving inventory management and purchasing power; and
- accessing worldwide manufacturing capabilities.
As a result of these factors, Technology Forecasters, an industry research
firm, has projected that the overall market for electronic manufacturing
services will grow at an average annual rate of 20% from 1998 to 2003, reaching
an estimated $150.0 billion in 2003.
STRATEGY
Our objective is to enhance our position as a top tier provider of advanced
electronics manufacturing services. Our strategy to meet this objective includes
the following key elements:
Deliver Complete Manufacturing Solutions. We believe OEMs are increasingly
requiring a wider range of advanced engineering and manufacturing services in
order to
S-15
<PAGE> 18
reduce their costs and accelerate their time to market. Building on our
integrated engineering and manufacturing capabilities, we provide services from
initial product design and test to final product assembly and distribution to
the OEM's customers. In addition, our network of facilities provides customers
with a scalable, flexible solution to support their needs as their products move
from design and initial introduction to high volume production and distribution.
Provide Flexible Manufacturing Solutions in Key Global Markets. We have
established an extensive network of manufacturing facilities in the world's
major electronics markets -- Asia, the Americas and Europe -- to serve the
increased outsourcing needs of both multinational and regional OEMs. This global
reach allows us to offer a broad range of manufacturing options that address the
specific volume, cost, proximity and technological requirements of our
customers. This strategy allows our customers to have a wide range of products
manufactured in or close to their major markets.
Capitalize on Industrial Park Strategy. We have established in low cost
regions fully integrated, high volume industrial parks that provide a total
manufacturing and fulfillment solution by locating manufacturing and
distribution operations and suppliers at a single site. Our industrial parks are
located in China, Hungary and Mexico, and we are developing an additional
industrial park in Brazil. This integrated approach to production and
distribution benefits our customers by reducing logistical barriers and costs,
improving supply-chain management, increasing flexibility, lowering
transportation costs and reducing turnaround times.
Establish Close Relationships with Customers. We believe we can become an
integral part of our customers' operations by working closely with them
throughout the design, manufacturing and distribution process, and by offering
flexible, highly responsive services. We believe we develop strong customer
relationships through a management approach that fosters rapid decision-making
and strong regional management, and a customer service orientation that responds
quickly to frequently changing customer design specifications and production
requirements. In many cases, we closely integrate our information systems with
those of our customers, and we are increasingly using the Internet and other
information technologies to help our customers further improve their supply
chain management. This customer-focused approach allows us to accelerate our
customers' time-to-market and time-to-volume production and helps them to
respond quickly to change.
Leverage Advanced Technological Capabilities. Our strengths in advanced
miniaturization, packaging, interconnect and radio frequency technologies enable
us to offer customers advanced design, technology and manufacturing solutions
for their leading-edge products. Our product introduction centers are located in
North America and Europe and provide a high level of engineering expertise to
the customer. Our technological capabilities help our customers to shrink
product size, improve product performance and reduce costs.
Selectively Pursue Asset Purchases and Acquisitions. Many OEMs are
divesting their internal manufacturing operations to electronics manufacturing
services providers. By purchasing facilities from OEMs, electronics
manufacturing services providers are able to rapidly develop customer
relationships and obtain established manufacturing capacity. Additionally, a
number of smaller electronics manufacturing services organizations are seeking
to strengthen their competitive position by becoming part of larger, global
electronics manufacturing services providers. We will continue to selectively
pursue the purchase of OEM assets and the acquisition of electronics
manufacturing services
S-16
<PAGE> 19
companies that offer relationships with key customers, strong and experienced
management teams and strategic capabilities and locations.
Our strategy, even if successfully implemented, may not reduce the risks
associated with our business. See "Risk Factors."
CUSTOMERS
Our customers consist of a select group of OEMs primarily in the
telecommunications and networking, consumer electronics and computer industries.
Within these industries, our strategy is to establish relationships with leading
companies that seek to outsource significant production volumes of complex
products. We focus on building long-term relationships with these customers and
expanding our relationships to include additional product lines and services. We
have increasingly focused on sales to larger companies and to customers in the
telecommunications and networking, consumer electronics and computer industries.
The following table lists in alphabetical order our largest customers in
the first six months of fiscal 2000 and the products for which we provide
manufacturing services.
<TABLE>
<CAPTION>
CUSTOMER END PRODUCTS
-------- ------------
<S> <C>
Cisco.................................... Data communications products
Ericsson................................. Business telecommunications system
Hewlett-Packard.......................... Printers
Microsoft................................ Computer peripheral devices and
Internet access devices
Motorola................................. Cellular phone boards and accessories
Nokia.................................... Cellular phones
Nortel Networks.......................... Data communications products
Philips.................................. Consumer electronics products
Qualcomm................................. Cellular phones
3Com..................................... Pilot electronic organizers
</TABLE>
In addition, we recently significantly expanded the scope of our
relationships with a number of existing customers, including Compaq (PCB
assemblies), Ericsson (wireless base stations) and Motorola (cellular phones);
entered into relationships with new customers, including ABB Automation Products
(PCB assemblies) and General Instruments (set-top boxes); and significantly
increased our sales of communications products to Lucent.
In fiscal 1999 and the first six months of fiscal 2000, our five largest
customers accounted for approximately 59% and 54%, respectively, of net sales.
Our largest customers during fiscal 1999 were Philips, Ericsson and Cisco
accounting for approximately 16%, 15% and 11% of consolidated net sales,
respectively. No other customer accounted for more than 10% of consolidated net
sales in fiscal 1999. The loss of one or more major customer would have a
material adverse effect on us. See "Risk Factors -- A majority of our sales
comes from a small number of customers; if we lose any of these customers, our
sales could decline significantly" and "-- Our customer requirements and
operating results vary significantly."
S-17
<PAGE> 20
SERVICES
Flextronics offers a broad range of integrated services, providing
customers with a total solution to take a product from initial design through
volume production, test and distribution into post-sales service and support.
Engineering Services. Our product introduction centers coordinate and
integrate our worldwide design, prototype, test development and other
engineering capabilities. Through these product introduction centers, we provide
a broad range of engineering services and, in certain locations, dedicated
production lines for prototypes. We have developed significant expertise in
advanced radio frequency technologies and high density system design. Our
engineering services strengthen our relationships with manufacturing customers
and attract new customers requiring advanced engineering services.
To assist customers with initial design, we provide computer-aided
engineering and computer-aided design engineering for manufacturability, circuit
board layout and test development. We also coordinate industrial design and
tooling for product manufacturing. After product design, we provide quick-turn
prototyping. During this process, we assist with the transition to high volume
production. By participating in product design and prototype development, we can
reduce manufacturing costs and accelerate the time to high volume production.
Materials Procurement and Management. Materials procurement and management
consists of the planning, purchasing, expediting and warehousing of components
and materials. Our inventory management expertise and volume procurement
capabilities contribute to cost reductions and reduce total cycle time. Our
industrial parks in China, Hungary and Mexico include providers of many of the
custom components that we use, thus reducing material and transportation costs,
simplifying logistics and facilitating inventory management.
Assembly and Manufacturing. Our assembly and manufacturing operations
include PCB assembly, and assembly of subsystems and systems that incorporate
PCBs and complex electromechanical components. A substantial portion of our net
sales is derived from the manufacture and assembly of complete products. We
employ just-in-time, ship-to-stock and ship-to-line programs, continuous flow
manufacturing, demand flow processes and statistical process control. As OEMs
seek to provide greater functionality in smaller products, they increasingly
require more sophisticated manufacturing technologies and processes. Our
investment in advanced manufacturing equipment and our experience and expertise
in innovative miniaturization, packaging and interconnect technologies (such as
chip scale packaging, chip-on-board, ball grid array and thermal vias) enable us
to offer a variety of advanced manufacturing solutions. In addition, we
manufacture miniature gold-finished PCBs and develop and produce
injection-molded plastic components. We have recently developed significant
expertise in the manufacturing of wireless communications products employing
radio frequency technology.
Test. We offer computer-aided testing of assembled PCBs, subsystems and
systems, which contributes significantly to our ability to deliver high-quality
products on a consistent basis. We work with our customers to develop
product-specific test strategies. Our test capabilities include management
defect analysis, in-circuit tests and functional tests. We either custom design
test equipment and software ourselves or use test equipment and software
provided by our customers. In addition, we also provide environmental stress
tests of board or system assemblies.
S-18
<PAGE> 21
Distribution. We offer our customers flexible, just-in-time delivery
programs allowing product shipments to be closely coordinated with customers'
inventory requirements. We often ship products directly into our customers'
distribution channels or directly to their end-user. We believe that this
service can provide our customers with a more comprehensive solution and enable
them to be more responsive to market demands.
SALES AND MARKETING
We achieve worldwide sales coverage through a direct sales force, that
focuses on generating new accounts, and through program managers, who are
responsible for managing relationships with existing customers and making
follow-on sales. Our Asian sales offices are located in Singapore and Hong Kong.
In North America, we maintain sales offices in California, Florida and
Massachusetts. In Europe, we maintain sales offices in England, France, Germany,
the Netherlands and Sweden. In addition to our sales force, our executive staff
plays an integral role in our marketing efforts.
RECENT ACQUISITIONS
In July 1999, we acquired Kyrel EMS Oyj, a provider of electronics
manufacturing services with two facilities in Finland and one in Luneville,
France. Kyrel employs approximately 900 people and its revenues for its fiscal
year ended December 31, 1998 were $236 million. We issued 1,639,625 shares in
the acquisition and agreed to issue up to an additional 82,180 shares. We
accounted for this acquisition as a pooling of interests.
In June 1999, we purchased the manufacturing facilities and related assets
of Ericsson's Visby, Sweden operations for approximately $27.6 million in cash.
Ericsson's Visby facility manufactures mobile systems infrastructure, primarily
radio base stations. In connection with this acquisition, we also entered into a
manufacturing service agreement with Ericsson.
In May 1999, we purchased the manufacturing facilities and related assets
of ABB Automation Products in Vasteras, Sweden for approximately $25.9 million
in cash. This facility provides PCB assemblies and other electronic equipment.
We also offered employment to 575 ABB personnel and entered into a manufacturing
service agreement with ABB.
In March 1999, we acquired the manufacturing facilities and related assets
of Advanced Component Labs HK Ltd., a Hong Kong-based manufacturer of advanced
technology PCBs for $15.0 million in cash. We believe the acquisition of
Advanced Component Labs will enhance Astron's advanced packaging substrate
technology to meet growing market demands for small handheld telecommunication
and personal computing devices and plan to consolidate its operations with those
of Astron.
In March 1999, we increased our ownership of FICO Investment Holding Ltd.
to 90% by acquiring an additional 50% of its equity interests for $7.2 million
in cash, 127,850 ordinary shares and $3.0 million in promissory notes. FICO is a
plastics injection molding company located in China.
Our ability to obtain the benefits of our recent acquisitions is subject to
a number of risks and uncertainties, including our ability to successfully
integrate the acquired operations and to maintain, and increase, sales to
customers of the acquired companies.
S-19
<PAGE> 22
See "Risk Factors -- We may encounter difficulties with acquisitions, which
could harm our business."
FACILITIES
Our facilities consist of a global network of industrial parks,
manufacturing and technology centers, regional manufacturing facilities and
product introduction centers providing approximately 4.7 million square feet of
capacity. Our industrial parks, each incorporating from approximately 205,000 to
435,000 square feet of facilities, are designed for fully integrated, high
volume manufacturing. These industrial parks offer manufacturing and
distribution operations and suppliers that are located at a single site in low
cost areas close to major electronics markets. We believe that by offering all
of those capabilities at a single site, we can reduce material and
transportation costs, simplify logistics and communications and improve
inventory management. This enables us to provide customers with a more complete,
cost-effective manufacturing solution. Manufacturing and technology centers are
facilities that have both medium and high volume manufacturing and product
introduction centers and, as a result, are where we focus on launching
customers' new products and transitioning them to volume production. Each center
features advanced technological competency. Regional manufacturing facilities
range from approximately 70,000 to 375,000 square feet and provide medium and
high volume production in locations close to strategic markets. Product
introduction centers provide a broad range of advanced engineering services and
prototype and low volume production capabilities.
The locations of our facilities are as follows:
<TABLE>
<CAPTION>
AMERICAS ASIA EUROPE
----------------------------------- ----------------- ---------------------
<S> <C> <C> <C>
INDUSTRIAL PARKS Guadalajara, Mexico Doumen, China Sarvar, Hungary
Zalaegerzeg, Hungary
MANUFACTURING AND San Jose/Fremont, CA, United States Hong Kong, China Althofen, Austria
TECHNOLOGY CENTERS Karlskrona, Sweden
Katrineholm, Sweden
Stockholm, Sweden
REGIONAL Richardson, TX, United States Jahore, Malaysia Hamilton, Scotland
MANUFACTURING Sao Paulo, Brazil Shenzhen, China Kyroskoski, Finland
FACILITIES Luneville, France
Tab, Hungary
PRODUCT INTRODUCTION Niwot, CO, United States Doumen, China Althofen, Austria
CENTERS Richardson, TX, United States Hamilton, Scotland
San Jose, CA, United States Karlskrona, Sweden
Westford, MA, United States Malmo, Sweden
Monza, Italy
Stockholm, Sweden
</TABLE>
Since the beginning of fiscal 1998, we have increased overall capacity by
approximately 3.2 million square feet through internal growth and acquisitions.
As a result, we have grown to approximately 4.7 million square feet of capacity
on four continents. We plan to further expand our facilities and add new
equipment, and we are developing an additional industrial park in Brazil.
We may encounter unforeseen difficulties, costs or delays in expanding our
facilities, and this expansion involves a number of risks and uncertainties. See
"Risk Factors -- We may encounter difficulties with acquisitions, which could
harm our business."
S-20
<PAGE> 23
UNDERWRITERS
We are offering ordinary shares described in this prospectus supplement
through a number of underwriters. Banc of America Securities LLC, Morgan Stanley
& Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, SG
Cowen Securities Corporation, Thomas Weisel Partners LLC and Lehman Brothers
Inc. are the representatives of the underwriters. We have entered into a firm
commitment underwriting agreement with the representatives. Subject to the terms
and conditions of the underwriting agreement, we have agreed to sell to the
underwriters, and each of the underwriters have each agreed to purchase, the
number of ordinary shares listed next to its name in the following table.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER ORDINARY SHARES
----------- ---------------
<S> <C>
Banc of America Securities LLC..............................
Morgan Stanley & Co. Incorporated...........................
Donaldson, Lufkin & Jenrette Securities Corporation.........
SG Cowen Securities Corporation.............................
Thomas Weisel Partners LLC..................................
Lehman Brothers Inc. .......................................
---------
Total............................................. 5,000,000
=========
</TABLE>
The underwriters initially will offer ordinary shares to the public at the
price specified on the cover page of this prospectus supplement. The
underwriters may allow to some dealers a concession of not more than $ per
share. The underwriters also may allow, and any dealers may reallow, a
concession of not more than $ per share to some other dealers. If all the
shares are not sold at the public offering price, the underwriters may change
the offering price and the other selling terms. The shares are offered subject
to a number of conditions, including:
- receipt and acceptance of our ordinary shares by the underwriters; and
- the right to reject orders in whole or in part.
The underwriters have an option to buy up to 750,000 additional ordinary
shares from Flextronics. These additional shares, called the over-allotment
option, would cover sales of shares by the underwriters which exceed the number
of shares specified in the table above. The underwriters have 30 days to
exercise this option. If the underwriters exercise this option, they will each
purchase additional shares approximately in proportion to the amounts specified
in the table above.
The following table shows the per share and total underwriting discounts
and commissions to be paid to the underwriters and the estimated offering
expenses to be paid by Flextronics. These amounts are shown assuming no exercise
and full exercise of the underwriters' option to purchase additional shares.
<TABLE>
<CAPTION>
PAID BY FLEXTRONICS
---------------------------
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share underwriting discounts and commissions........ $ $
Total underwriting discounts and commissions............
Estimated expenses to be paid by Flextronics............
</TABLE>
S-21
<PAGE> 24
Flextronics and each of its executive officers and directors and one of its
shareholders, who acquired shares in connection with one of our recent
acquisitions, have entered into lockup agreements with the underwriters. Under
these agreements, Flextronics and those holders of stock, options and warrants
may not dispose of or hedge any of our ordinary shares or securities convertible
into or exchangeable for our ordinary shares. However, the following shares are
not covered by the lockup agreements: (1) 200,000 shares may be sold by our
directors and executive officers; and (2) 200,000 shares may be sold by the
shareholder discussed above. These restrictions will be in effect for a period
of 90 days after the date of this prospectus supplement. At any time and without
notice, Banc of America Securities LLC may, in its sole discretion, release all
or some of the securities from these lockup agreements.
Flextronics will indemnify the underwriters against liabilities, including
liabilities under the Securities Act. If Flextronics is unable to provide this
indemnification, it will contribute to payments the underwriters may be required
to make in respect of those liabilities.
In connection with this offering, the underwriters may purchase and sell
ordinary shares in the open market. These transactions may include:
- short sales;
- stabilizing transactions; and
- purchases to cover positions created by short sales.
Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the ordinary shares while this
offering is in progress.
The underwriters may also impose a penalty bid. This means that if the
representatives purchase shares in the open market in stabilizing transactions
or to cover short sales, the representatives can require the underwriters that
sold those shares as part of this offering to repay the underwriting discount
received by them.
The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the ordinary shares, including:
- over-allotment;
- stabilization;
- syndicate covering transactions; and
- imposition of penalty bids.
As a result of these activities, the price of our ordinary shares may be
higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter-market or otherwise.
Due to the fact that one of the representatives of the underwriters was
organized within the last three years, we are providing you the following
information. Thomas Weisel Partners LLC, one of the representatives of the
underwriters, was organized and registered as a broker-dealer in December 1998.
Since December 1998, Thomas Weisel Partners LLC has been named as a lead or
co-manager of, or as a syndicate member in, numerous public offerings of equity
securities. Thomas Weisel Partners LLC does not have any
S-22
<PAGE> 25
material relationship with us or any of our officers, directors or other
controlling persons, except with respect to its contractual relationship with us
pursuant to the underwriting agreement entered into in connection with this
offering.
In connection with this offering, some underwriters and any selling group
members who are qualified market makers on the Nasdaq National market may engage
in passive market making transactions in our ordinary shares on the Nasdaq
National market in accordance with Rule 103 of Regulation M, during the business
day before the pricing of the offering, before the commencement of offers or
sales of our ordinary shares. Passive market makers must comply with applicable
volume and price limitations and must be identified as a passive market maker.
In general, a passive market maker must display its bid at a price not in excess
of the highest independent bid for the security; if all independent bids are
lowered below the passive market maker's bid, however, the bid must then be
lowered when purchase limits are exceeded.
LEGAL MATTERS
The validity of the ordinary shares offered hereby has been passed upon for
us by Allen & Gledhill, Singapore and for the underwriters by Arfat Selvam &
Gunasingham, Singapore. Certain United States legal matters in connection with
this offering will be passed upon for us by Fenwick & West LLP, Palo Alto,
California, and for the underwriters by Howard, Rice, Nemerovski, Canady, Falk &
Rabkin, a Professional Corporation, Palo Alto, California.
S-23
<PAGE> 26
PROSPECTUS
FLEXTRONICS INTERNATIONAL LTD.
ORDINARY SHARES
-------------------------
By this prospectus, we may offer up to 14,400,000 ordinary shares. We will
provide specific terms for the sale of the ordinary shares in supplements to
this prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
The ordinary shares are quoted on the Nasdaq National Market under the
symbol "FLEX." On September 13, 1999, the closing sale price of the ordinary
shares was $65.8125 per share.
-------------------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" IN THE
SUPPLEMENT TO THIS PROSPECTUS.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is September 24, 1999.
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Forward-Looking Statements.................................. 3
The Company................................................. 4
Enforcement of Civil Liabilities............................ 4
Risk Factors................................................ 4
Use of Proceeds............................................. 4
Description of Capital Shares............................... 5
Taxation.................................................... 7
Plan of Distribution........................................ 9
Legal Matters............................................... 10
Experts..................................................... 10
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
sell up to 14,400,000 ordinary shares in one or more offerings. This prospectus
provides you with a general description of the ordinary shares we may offer.
Each time we sell ordinary shares, we will provide a prospectus supplement that
will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information." The registration statement that contains
this prospectus, including the exhibits to the registration statement, contains
additional information about us and the securities offered under this
prospectus. That registration statement can be read at the SEC web site or at
the SEC offices mentioned under the heading "Where You Can Find More
Information." We may only use this prospectus to sell securities if it is
accompanied by a prospectus supplement. We are only offering these securities in
states where the offer is permitted.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available on the SEC's
website at "http://www.sec.gov."
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<PAGE> 28
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below, and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the sale of all the shares covered
by this prospectus:
- our Annual Report on Form 10-K for the fiscal year ended March 31, 1999;
- our Quarterly Report on Form 10-Q for the quarter ended June 25, 1999;
and
- the description of our ordinary shares contained in our Registration
Statement on Form 8-A dated January 31, 1994.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
Flextronics International Ltd.
2245 Lundy Drive
San Jose, California 95131
Attention: Laurette F. Slawson
Treasurer and Director of Investor Relations
Telephone: (408) 428-1300
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement, other than any information
superseded by a later document filed with the SEC and incorporated by reference
in this prospectus. We have not authorized anyone else to provide you with
different information. The selling shareholders may not make an offer of these
shares in any state where the offer is not permitted. You should not assume that
the information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. This Act provides a "safe
harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves so long as they identify these
statements as forward-looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results. All statements other than statements of historical fact we
make in this prospectus, prospectus supplement or in any document incorporated
by reference are forward-looking. In particular, the statements herein regarding
industry prospects and our future results of operations or financial position
are forward-looking statements. Forward-looking statements reflect our current
expectations and are inherently uncertain. Our actual results may differ
significantly from our expectations. The section entitled "Risk Factors" that
appears in our Annual Report on Form 10-K for the year ended March 31, 1999 and
in the prospectus supplement accompanying this prospectus describe some, but not
all, of the factors that could cause these differences.
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<PAGE> 29
THE COMPANY
Flextronics is a leading provider of advanced electronics manufacturing
services to original equipment manufacturers in the telecommunications,
networking, computer, consumer electronics and medical device industries. We
provide a wide range of integrated services, from initial product design to
volume production and fulfillment. Our manufacturing services range from printed
circuit board fabrication and assembly to complete product assembly and test. We
believe that we have developed particular strengths in advanced interconnect,
miniaturization and packaging technologies. In addition, we provide advanced
engineering services, including product design, PCB layout, quickturn
prototyping and test development. Throughout the production process, we offer
logistics services, such as materials procurement, inventory management,
packaging and distribution. Our principal executive offices are located at 514
Chai Chee Lane, #04-13, 1 Bedok Industrial Estate, Singapore 469029 and our
telephone number is 65-449-5255.
ENFORCEMENT OF CIVIL LIABILITIES
We are incorporated in Singapore under the Companies Act. Some of our
directors and executive officers reside in Singapore. All or a substantial
portion of the assets of such persons, and a substantial portion of our assets,
are located outside the United States. As a result, it may not be possible for
persons purchasing ordinary shares to effect service of process within the
United States upon such persons or Flextronics or to enforce against them, in
the United States courts, judgments obtained in such courts predicated upon the
civil liability provisions of the federal securities laws of the United States.
We have been advised by our Singapore legal advisors, Allen & Gledhill, that
there is doubt as to the enforceability in Singapore, either in original actions
or in actions for the enforcement of judgments of United States courts, of civil
liabilities predicated upon the federal securities laws of the United States.
RISK FACTORS
An investment in the ordinary shares involves a high degree of risk. You
should carefully consider the information contained under the heading "Risk
Factors" in the applicable supplement to this prospectus before investing in the
ordinary shares.
USE OF PROCEEDS
Unless otherwise indicated in the applicable supplement to this prospectus,
the net proceeds from the sale of ordinary shares offered under this prospectus
will be added to our general funds and may be used to:
- meet our working capital requirements;
- fund capital expenditures;
- repay debt; and
- finance acquisitions of other assets and companies.
Until the net proceeds have been used, they will be invested in short-term
marketable securities.
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<PAGE> 30
DESCRIPTION OF CAPITAL SHARES
The following is a brief summary of the more important rights of holders of
ordinary shares under Singapore law and our Articles of Association (the
"Articles"). This summary is not complete. Our Articles and our Memorandum of
Association also are exhibits to the registration statement of which this
prospectus forms a part. The Articles and the Memorandum of Association can be
obtained from our SEC filings as described under the heading "Where You Can Find
More Information" and also at our San Jose, California office and at our
registered office in Singapore.
ORDINARY SHARES
Our authorized capital consists of 250,000,000 ordinary shares, par value
S$0.01, of which 49,953,237 shares were outstanding on September 10, 1999. The
Articles enable us in certain circumstances to issue shares with preferential,
deferred or other special rights or restrictions as our directors may determine.
All of our outstanding shares are fully paid and our shareholders are not
subject to any calls on such shares. The shares offered hereby, when issued,
will also be fully paid and investors will not be subject to any calls on such
shares. All of our shares are in registered form, and the shares offered hereby
also will be in registered form. Except in the circumstances permitted by the
Singapore Companies Act, we can neither purchase our outstanding shares nor
grant any financial assistance for the acquisition of our shares.
NEW SHARES
New shares may only be issued with the prior approval of our shareholders
in a general meeting. Such approval, if granted, will lapse at the next Annual
General Meeting or, if earlier, the expiration of the period within which the
next Annual General Meeting is required to be held. At our 1999 Annual General
Meeting, our shareholders provided our directors with general authority to issue
new ordinary shares prior to our next Annual General Meeting. Subject to this,
and the provisions of the Singapore Companies Act and our Articles, our
directors may allot and issue new shares on such terms as they may think fit.
SHAREHOLDERS
Only persons who are registered in our books are recognized as shareholders
and absolute owners of the shares. On September 10, 1999, there were
approximately 392 holders of ordinary shares. We may, on giving not less than 14
days' notice, close the register of members for any time or times but the
register may not be closed for more than 30 days in any calendar year. Such
closure is normally made for the purpose of determining shareholders'
entitlement to receive dividends and other distributions and would, in the usual
case, not exceed 10 days.
TRANSFER OF SHARES
Subject to applicable securities laws, the ordinary shares are freely
transferable, and may be transferred by a duly signed instrument of transfer in
a form approved by our directors. The directors may decline to register any
transfer unless, among other things, it has been duly stamped and is presented
for registration together with the share certificate and such other evidence of
title as they may require. We will replace lost or destroyed certificates for
shares upon notice to us and upon, among other things, the applicant furnishing
such evidence and indemnity as the directors may require.
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<PAGE> 31
SHAREHOLDERS' MEETINGS
We are required to hold an Annual General Meeting in each year. Our
directors may convene an Extraordinary General Meeting whenever they think fit
and they must do so upon the request in writing of shareholders representing not
less than one-tenth of the total voting rights of all shareholders. In addition,
two or more shareholders holding not less than one-tenth of our issued share
capital may call a meeting. Unless otherwise required by law or by the Articles,
voting at general meetings is by ordinary resolution, requiring an affirmative
vote of a simple majority of the votes cast at a meeting of which at least 14
days' written notice is given. An ordinary resolution suffices, for example, in
respect of appointments of directors. A special resolution, requiring an
affirmative vote of at least 75% of the votes cast at the meeting of which at
least 21 days' written notice is given, is necessary for certain matters under
Singapore law, such as an alteration of the Articles.
VOTING RIGHTS
Voting at any meeting of shareholders is by a show of hands unless a poll
is duly demanded. If voting is by a show of hands, every shareholder who is
present in person or by proxy at the meeting has one vote. On a poll every
shareholder who is present in person or by proxy has one vote for every share
held by him. A poll may be demanded by the chairman of the meeting or by not
less than three members present in person or by proxy and entitled to vote or by
shareholders present in person or by proxy and representing in the aggregate not
less than one-tenth of the total voting rights of all shareholders having the
right to attend and vote at the meeting. There are no limitations imposed by the
laws of Singapore or by the Articles on the right of nonresident shareholders to
hold or vote ordinary shares, other than the limitations described below under
"Takeovers," which are applicable to all of our shareholders.
DIVIDENDS
Since inception, we have not declared or paid any cash dividends and our
current loan agreement prohibits the payment of cash dividends without the
lenders' prior consent. We anticipate that all earnings in the foreseeable
future will be retained to finance our business.
BONUS AND RIGHTS ISSUES
We may, with the approval by our shareholders in a general meeting,
capitalize any reserves or profits and distribute them as bonus shares to our
shareholders in proportion to their shareholdings. At our 1999 Annual General
Meeting, our shareholders authorized our directors, at any time on or before
June 30, 2000, to distribute one bonus share for each outstanding ordinary
share. Our directors may also issue to shareholders rights to take up additional
shares, in proportion to their shareholdings. Such rights would be subject to
any conditions attached to such issue.
TAKEOVERS
The acquisition of our shares is regulated by the Singapore Companies Act
(Chapter 50) and the Singapore Code on Takeovers and Mergers (the "Takeovers
Code"). Any person (or parties acting in concert) acquiring an interest in 25%
or more of the voting rights in us is obliged to extend a takeover offer for the
remaining voting shares in accordance with the provisions of the Takeovers Code.
An offer for consideration other than cash must be accompanied by a cash
alternative at not less than the highest price
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<PAGE> 32
(excluding stamp duty and commission) paid by the offeror or parties acting in
concert with him for shares of that class within the preceding 12 months. A
mandatory takeover offer is also required to be made if a person holding between
25% and 50% of the voting rights, either on his own or together with parties
acting in concert with him, acquires additional shares representing more than 3%
of the voting rights in any 12-month period.
LIQUIDATION OR OTHER RETURN OF CAPITAL
On a winding-up or other return of our capital, subject to any special
rights attaching to any other class of shares, holders of ordinary shares will
be entitled to participate in any surplus assets in proportion to their
shareholdings.
INDEMNITY
As permitted by the laws of Singapore, the Articles provide that, subject
to the Singapore Companies Act, our directors and officers will be indemnified
by us against any liability incurred by them in defending any proceedings,
whether civil or criminal, which relate to anything done or omitted to have been
done as our officer, director or employee and in which judgment is given in
their favor or in which they are acquitted or in connection with any application
under any statute for relief from liability in respect thereof in which relief
is granted by the court. Directors and officers may not be indemnified by us
against any liability to us for negligence, default, breach of duty or breach of
trust.
TRANSFER AGENT
Our transfer agent is Boston EquiServe, P.O. Box 8040, Boston,
Massachusetts 02266-8040.
TAXATION
This summary of Singapore and U.S. tax considerations is based on current
law and is provided for general information. The discussion does not purport to
deal with all aspects of taxation that may be relevant to particular
shareholders in light of their investment or tax circumstances, or to certain
types of shareholders, including insurance companies, tax-exempt organizations,
regulated investment companies, financial institutions or broker-dealers, and
shareholders that are not U.S. shareholders (as defined below) subject to
special treatment under the U.S. federal income tax laws. U.S. shareholders
should consult their own tax advisors regarding the particular tax consequences
to such shareholders of any investment in the ordinary shares.
INCOME TAXATION UNDER SINGAPORE LAW
Under current provisions of the Income Tax Act, Chapter 134 of Singapore,
corporate profits are taxed at a rate equal to 26%. Under Singapore's taxation
system, the tax paid by a company is deemed paid by its shareholders. Thus, the
shareholders receive dividends net of the tax paid by us. Dividends received by
either a resident or a nonresident of Singapore are not subject to withholding
tax. Shareholders are taxed on the cash amount of the dividend plus the amount
of corporate tax paid by us. The tax paid by us will be available to
shareholders as a tax credit to offset the Singapore income tax liability on
their overall income, including the gross amount of dividends. No tax treaty
currently exists between the Republic of Singapore and the U.S.
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<PAGE> 33
Under current Singapore tax law there is no tax on capital gains, and,
thus, any profits from the disposal of shares are not taxable in Singapore
unless the vendor is regarded as carrying on a trade in shares in Singapore, in
which case, the disposal profits would be taxable as trade profits rather than
capital gains.
There is no stamp duty payable in respect of the holding and disposition of
shares, or the acquisition of newly issued shares. When outstanding shares are
acquired in Singapore, stamp duty is payable on the instrument of transfer of
the shares at the rate of S$2 for every S$1,000 of the market value of the
shares. The stamp duty is borne by the purchaser unless there is an agreement to
the contrary. Where the instrument of transfer is executed outside of Singapore,
stamp duty must be paid if the instrument of transfer is received in Singapore.
Under our Articles of Association, our directors are authorized to refuse to
register a transfer unless the instrument of transfer has been duly stamped.
INCOME TAXATION UNDER UNITED STATES LAW
Individual shareholders that are U.S. citizens or resident aliens (as
defined in the Internal Revenue Code), corporations or partnerships or other
entities created or organized under the laws of the United States, or any
political subdivision thereof, and certain trusts and estates ("U.S.
shareholders") will, upon the sale or exchange of a share, recognize gain or
loss for U.S. income tax purposes in an amount equal to the difference between
the amount realized and the U.S. shareholder's tax basis in such a share. If
paid in currency other than U.S. dollars, the U.S. dollar amount realized (as
determined on the trade date) is determined by translating the foreign currency
into U.S. dollars at the spot rate in effect on the settlement date of the sale
in the case of a U.S. shareholder that is a cash basis taxpayer. An accrual
basis taxpayer may elect to use the spot rate in effect on the settlement date
of the sale by filing a statement with the U.S. shareholder's first return in
which the election is effective clearly indicating that the election has been
made. Such an election must be applied consistently from year to year and cannot
be changed without the consent of the Internal Revenue Service. Such gain or
loss will be capital gain or loss if the share was a capital asset in the hands
of the U.S. shareholder and will not be short-term capital gain or loss if the
share has been held for more than one year. If a U.S. shareholder receives any
currency other than U.S. dollars on the sale of a share, such U.S. shareholder
may recognize ordinary income or loss as a result of currency fluctuations
between the date of such sale and the date such sale proceeds are converted into
U.S. dollars.
U.S. shareholders will be required to report as income for U.S. income tax
purposes the amount of any dividend received from us to the extent paid out of
our current or accumulated earnings and profits, as determined under current
U.S. income tax principles. If over 50% of our stock, by vote or value, were
owned by U.S. shareholders who individually held 10% or more of our voting
stock, the U.S. shareholders potentially would be required to include in income
a portion or all of their pro rata share of our earnings and profits and the
earnings and profits of our non-U.S. subsidiaries. If 50% or more of our assets
during a taxable year produced or were held for the production of passive
income, as defined in Section 1297(b) of the Internal Revenue Code (for example,
certain forms of dividends, interest and royalties), or 75% or more of our gross
income for a taxable year was passive income, adverse U.S. tax consequences
could result to our U.S. shareholders.
Shareholders that are not U.S. shareholders ("non-U.S. shareholders") will
not be required to report for U.S. federal income tax purposes the amount of any
dividend
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<PAGE> 34
received from us. Non-U.S. shareholders, upon the sale or exchange of a share,
would generally not be required to recognize gain or loss for U.S. federal
income tax purposes.
ESTATE TAXATION
In the case of an individual who is not domiciled in Singapore, a Singapore
estate tax is imposed on the value of all movable and immovable properties
situated in Singapore. Our ordinary shares are considered to be situated in
Singapore. Thus, an individual shareholder who is not domiciled in Singapore at
the time of his or her death will be subject to Singapore estate tax on the
value of any such shares held by the individual upon the individual's death.
Such a shareholder will be required to pay Singapore estate tax to the extent
that the value of the shares (or in aggregate with any other assets subject to
Singapore estate tax) exceeds S$600,000. Any excess will be taxed at a rate
equal to 5% on the first S$12,000,000 of the individual's Singapore chargeable
assets and thereafter at a rate equal to 10%. An individual shareholder who is a
U.S. citizen or resident (for U.S. estate tax purposes) also will have the value
of the shares included in the individual's gross estate for U.S. estate tax
purposes. An individual shareholder generally will be entitled to a tax credit
against the shareholder's U.S. estate tax to the extent the individual
shareholder actually pays Singapore estate tax on the value of the shares;
however, the tax credit is generally limited to the percentage of the U.S.
estate tax attributable to the inclusion of the value of the shares included in
the shareholder's gross estate for U.S. estate tax purposes, adjusted further by
a pro rata apportionment of available exemptions. Individuals who are domiciled
in Singapore should consult their own tax advisors regarding the Singapore
estate tax consequences of their investment.
PLAN OF DISTRIBUTION
We may sell the securities (1) through underwriters or dealers, (2) through
agents, or (3) directly to one or more purchasers. The applicable prospectus
supplement will describe the terms of the offering of the securities, including:
- the name or names of any underwriters, if any;
- the purchase price of the securities and the proceeds we will receive
from the sale;
- any underwriting discounts and other items constituting underwriters'
compensation;
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchange or market on which the securities may be listed.
Only underwriters named in the prospectus supplement are underwriters of
the securities offered by the prospectus supplement.
If underwriters are used in the sale, they will acquire the securities for
their own account and may resell them from time to time in one or more
transactions at a fixed public offering price or at varying prices determined at
the time of sale. We may offer the securities to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. Subject to certain conditions, the underwriters will be obligated to
purchase all the securities of the series offered by the prospectus supplement.
Any public offering price and any discounts or concessions allowed or reallowed
or paid to dealers may change from time to time.
We may sell securities directly or through agents we designate from time to
time. We will name any agent involved in the offering and sale of securities and
we will describe any
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<PAGE> 35
commissions we will pay the agent in the prospectus supplement. Unless the
prospectus supplement states otherwise, our agent will act on a best-efforts
basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain types
of institutional investors to purchase securities from us at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
We will describe the conditions to these contracts and the commissions we must
pay for solicitation of these contracts in the prospectus supplement.
We may provide agents and underwriters with indemnification against certain
civil liabilities, including liabilities under the Securities Act, or
contribution with respect to payments that the agents or underwriters may make
with respect to such liabilities. Agents and underwriters may engage in
transactions with, or perform services for, us in the ordinary course of
business.
All securities we offer other than common stock will be new issues of
securities with no established trading market. Any underwriters may make a
market in these securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. We cannot guarantee
the liquidity of the trading markets for any securities.
LEGAL MATTERS
Allen & Gledhill, Singapore will provide us with an opinion as to the
legality of the ordinary shares. Counsel for any underwriters named in the
applicable prospectus supplement will provide an opinion as to certain legal
matters relating to the ordinary shares.
EXPERTS
Our consolidated financial statements appearing in our Annual Report (Form
10-K) for the year ended March 31, 1999 have been audited by Arthur Andersen
LLP, independent public accountants as indicated in their report therein. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing. Our future financial statements and the reports thereon
of Arthur Andersen LLP also will be incorporated by reference in this prospectus
in reliance upon the authority of that firm as experts in giving those reports
to the extent said firm has audited those financial statements and consented to
the use of their reports thereon.
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5,000,000 Shares
FlextronicsLogo
-------------------------
PROSPECTUS SUPPLEMENT
OCTOBER , 1999
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BANC OF AMERICA SECURITIES LLC
MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
SG COWEN
THOMAS WEISEL PARTNERS LLC
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